RE/MAX Canada anticipates a softening fall housing market for majority of regions across the country

While Canada grapples with the highest interest rates it's seen in decades, RE/MAX Canada says its brokers and agents across the country are reporting that both the interest rate climate and lack of inventory are likely to result in a softer market this fall.

According to the 2023 Fall Housing Market Outlook Report, the RE/MAX network expects the national average residential sale price across all home types to remain flat, with no change anticipated between now and the end of the year.

As part of the 2023 Fall Housing Market Outlook Report, 74.1 per cent of RE/MAX broker regions surveyed saw the number of listings decrease between 1.2 up to 40 per cent between January – July year-over-year. The number of MLS sales in all regions surveyed as part of the report experienced declines year-over-year from a decrease of 4.1 per cent to upwards of 39.6 per cent.

"If the fall market is an early indicator for 2024 activity, we may see a very active first quarter as buyers and sellers take advantage of easing prices into the earlier part of next year," said Christopher Alexander, President, RE/MAX Canada.

"While we wait for governments to implement a tangible national housing strategy to boost Canada's supply of both affordable and diverse housing, the market is starting to ease in some regions. This is bringing some much-needed relief from the sky-high prices we've experienced over the past couple of years."

Added Elton Ash, Executive Vice President of RE/MAX Canada: "The Canadian housing market has historically given homeowners great returns and solid financial security. We believe in the long-term health of Canada's housing market, but in order to protect it, we need to acknowledge and address the housing supply shortage in every city, town, and neighbourhood across the country."

RE/MAX Canada said the housing inventory shortage is having the greatest impact on Millennial and Gen Z homebuyers. According to a Leger survey commissioned by RE/MAX Canada as part of the report, lack of affordable housing inventory is leading more than half of Gen Zs (55 per cent), and nearly half of Millennials (49 per cent) to change their housing plans.

The survey said 33 per cent of Canadians who are interested in buying and/or selling a home in the next 12 months will wait and see how interest rate changes play out before buying. On the other hand, over half of Canadians (51 per cent) say further interest rate increases this year will not change their financial situation or impact their plans to buy or sell a home. Overall, younger Canadians are more likely to rely on BoC interest rate announcements to determine the best time to buy or sell (47 per cent of Gen Zs and 52 per cent of Millennials).

Regional Market Insights

RE/MAX brokers and agents in Canada were asked to provide an analysis of their local market between January and July 2022 and 2023 and share their estimated outlook for fall 2023. Based on their insights, 44 per cent of housing markets in Canada are expected to be sellers' markets in 2023, while the rest are anticipated to be a mix of balanced, buyers, and sellers/balanced and buyers/balanced (mix depending on location in the specific region), said the report.

Here's a breakdown from the report on the regional highlights:

Western Canada and the Prairies

Contrary to other regions across the country, in Western Canada and the Prairies, the majority of markets are anticipating average residential sale prices to increase this fall by 0.7 per cent – 4.5 per cent in regions such as Calgary, AB, Edmonton, AB, Winnipeg, MB, Red Deer, AB. On the flip side, regions such as Greater Vancouver Area (GVA), BC, Kelowna, BC, are expecting sales to soften by two – three per cent.

The mix of outlooks is also reflective of the estimated market type heading into the fall, with the majority of regions reporting a mix of sellers/balanced depending on the price point, property type, location in the specific region.

Ontario

Ontario is a diverse mix of average residential sale price estimates heading into the fall, with seven regions reporting a decrease expected including Hamilton, ON, Ottawa, ON, Windsor, ON (two per cent), North Bay, ON (three per cent), Kitchener-Waterloo, ON (four per cent), Durham Region, ON, Peterborough, ON (five per cent), while Thunder Bay, ON, and Peel Region, ON are likely to remain relatively flat (zero per cent) this fall.

Regions that are anticipating an increase in average residential sale price estimates this fall include; Burlington, ON (one per cent), Lakelands West, ON, Oakville, ON (two per cent), York Region, ON (2.2 per cent), Greater Toronto Area (GTA), ON (2.5 per cent), Sudbury, ON (five per cent).

In Ontario, 53 per cent of markets are likely to be sellers markets this fall, while 40 per cent are anticipated to be balanced, and seven per cent buyers. 

Across Ontario, the simultaneous impact of inventory shortages and rising interest rates has influenced markets throughout 2023 and will continue to do-so heading into the fall. Lack of inventory is the most pressing factor influencing activity this fall in regions such as Sudbury, ON, Peel Region, ON, and Ottawa, ON, while other markets reported both being major contributors to market activity this fall. 

While rising interest rates throughout 2023 has created some consumer reluctancy to enter the market in some regions, by comparison, buyers in regions like Hamilton and Burlington were actually aided by rising interest rates this year.

In regions, like the GTA, it's important to note that while inventory will continue to be a challenge in the long-term, in the short-term, as we look ahead to the fall, interest rates are likely to be the most pressing factor influencing the market. Regions such as Hamilton-Burlington are also likely to be most heavily impacted by interest rates heading into the fall.

Quebec

The island of Montreal experienced a decrease in prices by 5.8 per cent between January – June 2022 and 2023, as well as an 18.2 per cent decrease in number of sales. Conversely, number of listings increased by 63.7 per cent in the same period. Unlike other regions, the area has properties available, however, mostly renovated, and well-priced homes are moving quickly. The region is also seeing a new trend of assuming sellers' mortgages, transferring mortgage, or paying in cash, primarily among high-end buyers. RE/MAX brokers reported an increase in these practices as a way for buyers to combat rising interest rates and mortgage payments.

Atlantic Canada

Keeping with the trend across the country, all markets in Atlantic Canada surveyed reported low inventory in tandem with rising interest rates which have adversely affected the market, especially for buyers with lower price points (Halifax, NS, Charlottetown area, PEI), or first-time homebuyers (St. John's, NF).

In Atlantic Canada, average residential prices are expected to decline between one and two per cent in Halifax, NS and Charlottetown Area, PEI for the remainder of 2023 and increase by three per cent in Moncton, NB. Average residential prices are expected to remain flat in St. John's, NF for the back-half of 2023. Most markets in Atlantic Canada are considered sellers' markets (St. John's, NL, Halifax, N.S and Moncton, NB) apart from the Charlottetown area, PEI, which is considered balanced.

Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)

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